Only 6% of the public would seek advice on life insurance from a financial adviser, according to new research by Investment Trends.

The survey also found only 6% of clients seeking financial advice talk to their adviser about life insurance.

Investment Trends analyst Recep Peker told insuranceNEWS.com.au there are problems with the public’s perception of life insurance and its importance.

“We have found it is about awareness of life insurance,” he said.

The research also found people are only willing to pay $300 upfront for financial advice – a fraction of what it costs to deliver this service.

The 2010 Planner Business Model Report surveyed more than 1300 advisers last month. It also relied on a study of 1100 Australian investors conducted last December.

While the public was only willing to pay $300 per visit, the survey found the average adviser estimated the breakeven cost of providing full advice, including life insurance, was $2700 and providing simple advice was $1200.

They estimated on average that the cost of maintaining a client file, including periodic reviews, was $1400 per annum, almost five times the $300 per visit investors expect to pay for ongoing advice.

“At a time when planners are increasingly moving to a fee-for-service model, our survey shows a striking disconnect between the expectations of planners and their clients,” Mr Peker said.

“It also suggests that many investors may be unaware of the true cost of advice under existing asset-based fee models.”

The adviser costs were mainly based on providing investment advice rather than preparing life insurance, which can take a number of weeks to finalise.

Advisers providing life insurance are arguing a commission-based model for payment is preferable to a fee-for-service model saying the latter would make insurance too expensive for the public.

Currently the adviser receives the commission for arranging life insurance from the insurer and the public only pays the premium determined by the insurance company for the policy.